In spring of 1856, the boat was sold to Captain William Terrill and William Boyd, and it made fourteen trips up and down the Missouri during their ownership. In March, the boat collided with an obstacle, nearly sinking. Repairs were made in nearby Portland. A few weeks later the boat blew a cylinder head and had to be repaired again. The rest of the season was uneventful for the boat until September 5.[2][3]

On September 5, 1856, the Arabia set out for a routine trip. At Quindaro Bend, near the town of Parkville, Missouri, the boat hit a submerged walnut tree snag. The snag ripped open the hull, which rapidly filled with water. The upper decks of the boat stayed above water, and the only casualty was a mule that was tied to sawmill equipment and forgotten. The boat sank so rapidly into the mud that by the next morning, only the smokestacks and pilot house remained visible. Within a few days, these traces of the boat were also swept away. Numerous salvage attempts failed, and eventually the boat was completely covered by water. Over time, the river shifted a half a mile to the east.[2][3] The site of the sinking is in present-day Kansas City, Kansas.

In the 1860s, Elisha Sortor purchased the property where the boat lay. Over the years, legends were passed through the family that the boat was located somewhere under the land. In the surrounding town, stories were also told of the steamboat, but the exact location of the boat was lost over time.[3]

In 1987, Bob Hawley and his sons, Greg and David, set out to find the boat. The Hawleys used old maps and a proton magnetometer to figure out the probable location, and finally discovered the Arabia half a mile from the river and under 45 feet (14 m) of silt and topsoil.

The owners of the farm gave permission for excavation, with the condition that the work be completed before the spring planting. The Hawleys, along with family friends Jerry Mackey and David Luttrell, set out to excavate the boat during the winter months while the water table was at its lowest point. They performed a series of drilling tests to determine the exact location of the hull, then marked the perimeter with powdered chalk. Heavy equipment, including a 100-ton crane, was brought in by both river and road transport during the summer and fall. 20 irrigation pumps were installed around the site to lower the water level and to keep the site from flooding. The 65-foot-deep (20 m) wells removed 20,000 US gallons (76,000 l) per minute from the ground. On November 26, 1988, the boat was exposed. Four days later, artifacts from the boat began to appear, beginning with a Goodyear rubber overshoe. On December 5, a wooden crate filled with elegant china was unearthed. The mud was such an effective preserver that the yellow packing straw was still visible. Thousands of artifacts were recovered intact, including jars of preserved food that are still edible. The artifacts that were recovered are housed in the Arabia Steamboat Museum.[2][3]

On February 11, 1989, work ceased at the site, and the pumps were turned off. The hole filled with water overnight.